Guidelines for Fighting Bid Rigging in Public Procurement

The OECD Recommendation on Fighting Bid Rigging in Public Procurement includes the Guidelines for Fighting Bid Rigging in Public Procurement developed by the OECD Competition Committee in 2009. The Guidelines help governments improve public procurement by fighting bid rigging. They are designed to reduce the risks of bid rigging through careful design of the procurement process and to detect bid rigging conspiracies during the procurement process. The Guidelines include two checklists: a Checklist for Detecting Bid Rigging in Public Procurement and a Checklist for Designing the Public Procurement Process to Reduce the Risks of Bid Rigging.

An effective procurement policy must be designed to obtain goods and services at the lowest possible price or, more generally, to achieve the best value for money. Vigorous competition among suppliers helps governments attain this objective. However, the formal rules that govern procurement, the way in which an auction is carried out and the design of the auction itself can all act to hinder competition and help promote or sustain bid-rigging conspiracies. Bid-rigging conspiracies waste taxpayers’ money and cause governments to pay far more than a fair price.

Bid rigging occurs in all types of industries and circumstances, and in all parts of the world. When bid rigging impacts public procurement, it has the potential to cause great harm. One reason for this is that public procurement is often a large part of a nation's economy. In many OECD countries, it amounts to 15 per cent of the gross domestic product and in most developing countries, it is substantially more than this. While bid rigging can emerge in both procurement and “ordinary” markets, it is critical that procurement regulations do not unwittingly facilitate collusive arrangements. The risks for competition in public procurement can be reduced by careful consideration of the various auction features and their impact on the likelihood of collusion. Designing auctions and procurement tenders to minimize collusion may contribute significantly to the fight against anti-competitive behaviour. A well-thought-through tender can reduce or even eliminate the ability of bidders to reach a collusive agreement.

The Guidelines provide the most comprehensive strategy available today for the design of tenders to hinder bid rigging and for the detection of bid rigging during the tender process. They can be applied in a decentralised manner across government at both national and local levels. The Guidelines can be used by public officials with no specialized economics or competition policy training. The Guidelines are available in a number of languages in order to encourage broad consideration of the methods outlined.